Journal of Economic Growth

, Volume 21, Issue 1, pp 1–33 | Cite as

Premature deindustrialization

Article

Abstract

I document a significant deindustrialization trend in recent decades that goes considerably beyond the advanced, post-industrial economies. The hump-shaped relationship between industrialization (measured by employment or output shares) and incomes has shifted downwards and moved closer to the origin. This means countries are running out of industrialization opportunities sooner and at much lower levels of income compared to the experience of early industrializers. Asian countries and manufactures exporters have been largely insulated from those trends, while Latin American countries have been especially hard hit. Advanced economies have lost considerable employment (especially of the low-skill type), but they have done surprisingly well in terms of manufacturing output shares at constant prices. While these trends are not very recent, the evidence suggests both globalization and labor-saving technological progress in manufacturing have been behind these developments. The paper briefly considers some of the economic and political implications of these trends.

Keywords

Deindustrialization Industrialization Economic growth 

JEL classification

014 

Notes

Acknowledgments

I am grateful to Elias Sanchez-Eppler, Russell Morton, and Juan Obach for expert research assistance, Robert Lawrence and Arvind Subramanian for useful conversations, David Romer for comments, and Jesus Felipe for sharing his data set. Four referees have provided very constructive suggestions that led to improvements.

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Copyright information

© Springer Science+Business Media New York 2015

Authors and Affiliations

  1. 1.John F. Kennedy School of GovernmentHarvard UniversityCambridgeUSA

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